Here is a chart of four different "price" series related to the cost of education. Being a parent, I've kept an eye on these for a little while. Series are realized historical data:
1) College Index -- "Comprehensive fees" for a custom index of upper quartile, selective private liberal arts colleges. Comprehensive fees include tuition, room and board, and misc fees but exclude things like travel and books,
2) Private K12 -- Pretty idiosyncratic here; this is just me watching the only two places I know,
3) HEPI -- The Higher Education Price Index, time shifted forward 1 year,
4) CPI-U -- A measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
Conclusions?
I'm not totally sure I have a conclusion here. If pressed, I'd say:
- Education expenses have been outrunning inflation for a long time thanks to the labor component of education and the growing role of administrators and sub-administrators over the years. Add in unnecessary and sometimes grotesque spending on things like climbing walls, student centers, and weirdly posh athletic centers and we have the beginnings of a rationale. I'd riff on the interaction between subsidized loans and Ed costs but it's been covered elsewhere better. General consensus seems to be it is an unhealthy relationship but I guess I could have read it all wrong.
- One can view the gap between education inflation and normal inflation as a kind of tax and I guess it kinda is. At the very least one should make sure that the financial plan, especially for early retirees that may still have a significant exposure to ed expenses, has a clear eyed view of the future liability and the incremental effect of the "tax."
- What's up with the private K12 inflation? Same the as above points, I suppose, but probably worse...but then again who knows. If they weren't private one could shine a little sun on the the topic and maybe even have a little leverage, but then again...one can't.
- For K12, consider moving to Minnesota where many public schools (or at least they used to be) are better than some of the very best private schools are elsewhere. On the other hand watch out for that marginal tax rate (ouch!).
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